Two of the primary approaches to mediation are facilitative and evaluative. Under the facilitative approach, the mediator orchestrates a process that facilitates communication between the parties concerning their respective interests and concerns. The mediator typically refrains, however, from sharing an opinion concerning the strengths or weaknesses of either side’s positions.
In contrast, under the evaluative approach, the mediator will also provide each party with a neutral assessment of the strengths and weaknesses of their respective cases. At the same time, it is well-established that, as a neutral, a mediator may not offer legal advice to either party.
The evaluative approach to mediation thus creates something of a gray area for mediators. Where does one draw the line between evaluating the strengths and weaknesses of a case and providing legal advice? This question takes on practical significance where a settlement has been executed at the conclusion of a mediation. At that point, the dispute appears to be resolved. Yet might a party be entitled to rescind the settlement if it later determines that the mediator’s evaluation was flawed?
A Fall 2017 article in the Harvard Negotiation Law Review entitled The Irony of Mediator as Problem Maker: Mediator Misconduct Setting Aside Mediated Agreements reviews caselaw addressing efforts to rescind settlements based on allegations of mediator coercion. It found that except for a few reported cases where the alleged mediator misconduct was particularly egregious, courts have consistently applied principles of contract law and mediation confidentiality to enforce settlements reached through mediation even where one party later complains that it entered into the settlement based on flawed advice from the mediator.
Illustrative is the Second Circuit’s opinion in Chitkara v. New York Tel. Co., 45 F. App’x 53 (2d Cir. 2002). In Chitkara, the plaintiff filed Title VII and state-law discrimination and retaliation claims against his former employer, and then filed for bankruptcy. After a district court dismissed nearly all of plaintiff’s claims as time-barred, the parties and their counsel participated in a mediation to resolve the remaining retaliation count. The outcome was a handwritten agreement signed by both parties and their attorneys under which the plaintiff agreed to dismiss his claim in exchange for $50,000.
The plaintiff, however, subsequently sought to disavow the settlement on the ground that the mediator had erroneously advised him that if the retaliation claim proceeded to trial, any recovery would be paid to his creditors in the bankruptcy case. The plaintiff claimed that, after the mediation concluded, he learned from his bankruptcy attorney that, contrary to the mediator’s advice, the retaliation claim was insulated from creditors of the bankruptcy estate. The defendants moved to enforce the settlement.
The District Court granted the defendant’s motion, and the Second Circuit affirmed, noting that the plaintiff did not have to accept the mediator’s opinion without asking his attorney to undertake further due diligence:
The nature of mediation is such that a mediator’s statement regarding the predicted litigation value of a claim, where that prediction is based on a fact that can readily be verified, cannot be relied on by a counseled litigant whose counsel is present at the time the statement is made.
Based on similar reasoning, a Florida district court enforced a settlement where a party represented by counsel at a mediation sought to revoke the settlement on the ground that the mediator had provided her with faulty advice concerning bankruptcy law. Foster v. Orkin Pest Control et al., 2008 WL 11472149 (M.D. Fla. July 17, 2008). The court noted that the party’s attorney had warned her that he could not confirm the mediator’s advice, and that the plaintiff could have suspended the mediation to verify whether the mediator’s advice was accurate by asking her attorney to independently research the issue.
The notion that a party to a mediation has an obligation to verify any statement made by the mediator concerning which there is any uncertainty was also highlighted in Baas v. Baas, 2018 WL 6252919 (Ky. Ct. App. Nov. 30, 2018). In Baas, the mediator did not assess the merits of the parties’ legal positions. Instead, the wife’s complaint in Baas was that the mediator had inaccurately conveyed information from the husband that adversely impacted her ability to evaluate the husband’s offer concerning certain tax credits.
The trial court rejected the wife’s argument and the appellate court affirmed, observing that the wife and her attorney possessed the means to obtain “knowledge of the truth or falsity of the representations” allegedly communicated by the mediator, and that a party has a duty to avail itself of the opportunity to verify any of the mediator’s statements such as by consulting an expert, or conducting further factual due diligence or legal research.
Notably, Chitkara, Foster, and Baas all involved parties represented by counsel at the mediation. Clearly, a mediator needs to tread much more carefully when applying the evaluative approach to mediation of a dispute between parties unrepresented by counsel. I have not located a case addressing enforcement of a settlement in that context, but an excellent article on the subject by Professor, lawyer and mediator James Stark entitled The Ethics of Mediation Evaluation: Some Troublesome Questions and Tentative Proposals, from an Evaluative Lawyer Mediator appears in the 1997 issue of the South Texas Law Review.
Very helpfully, the article examines the hazy boundary between representational advice and mediation evaluation in the context of a hypothetical involving two unrepresented parties embroiled in a landlord tenant dispute over the return of a small security deposit. The central question asked is how far the mediators should go in advising each of the parties about the strengths and weaknesses of their respective positions.
Stark observes generally that representational advice is motivated by zealous advocacy and the goal of maximizing the outcome for the client while mediation evaluation is constrained by the requirement of impartiality and the objective of moving parties towards compromise. On the other hand, Stark also sees evaluative mediation as promoting the principle of party self-determination through informed consent. Without delving into Stark’s proposed reconciliation of these competing values, it is my humble opinion that we should not lose sight of the central goal of mediation: dispute resolution. Stark argues that dispute resolution is not an ethical goal, but I strongly differ and plan to take up that debate more fully in a future blog post. But for now let’s focus on the practical bottom line: in most cases, dispute resolution is what motivates parties to seek mediation; if they wanted to continue fighting, and assume the risks of litigation, they could have proceeded in court (an exception being court-ordered mediation, but even then the value of dispute resolution is still present even if the court itself is motivated by a desire to clear its docket).
Therefore, in my view, the touchstone of appropriate evaluation when working with unrepresented parties should be that which encourages compromise and brings the parties together rather than driving them apart (and if you read Stark’s article, you can figure out how that position would resolve the borderline case in his hypothetical). To be sure, this approach is likely to lead to the omission of observations about certain facts and legal principles that an advocate in an adversarial posture might provide. But a mediator needs to maintain impartiality, and thus, in my view, so long as the mediator advises parties of their absolute right to consult with independent counsel and other advisors before committing to a resolution, the mediator has acted properly. Of course, if any readers disagree, we would be delighted to hear your feedback. As Stark’s article makes clear, applying the evaluative approach to mediation of disputes between unrepresented parties is a complex question that raises important ethical and practical considerations.
The questions raised by Stark’s article segue nicely into a practical guideline that emerges from the cases cited above; namely, whether working with represented or unrepresented parties, mediators should ask participants to confirm their understanding in writing before the mediation begins that the mediator is a neutral who does not represent either party; that while the mediator may at times offer his or her assessment of strengths and weaknesses, such evaluation should not be construed as legal advice; and that both parties are free to solicit advice from independent counsel and other advisors should they have any doubts about any evaluation provided by the mediator. Any subsequent settlement agreement should contain a similar acknowledgement.
Such a provision was instrumental in Baas where the court observed that the wife had signed an “Agreement to Mediate” at the beginning of the mediation session providing that “(1) the mediator did not represent either or both parties, nor will she give advice, (2) persons other than the mediator, such as an accountant or actuary, could be called for consultation, and (3) if no such expert was available, mediation could be continued or concluded.” According to the court, this provision put the wife and her counsel on notice of the mediator’s limited role as a facilitator, and warned them not to rely upon any statement by the mediator, but to seek further clarification as they deemed necessary.
For similar reasoning in two cases addressing mediation settlements that acknowledged the mediator’s neutrality, see Lightholder v. Stanley, 2011 WL 213847, at *2 (Ariz. Ct. App. Jan. 20, 2011) (the mediation agreement, however, includes Stanley’s signed statement that she entered into the agreement “freely and voluntarily” and was “advised by the mediator to seek legal advice from an attorney concerning the substance of this agreement.”); Barkhorn v. Int’l Longshoremen’s Ass’n, 2016 WL 97827, at *3 n. 2 (D. Md. Jan. 8, 2016) (“Plaintiff asserts that the settlement agreement is invalid due to false legal advice from the Mediator, yet the [settlement agreement] clearly states Plaintiff was advised to consult with an attorney and [ ] given a reasonable time to consider the agreement before signing.”).
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